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Petronet LNG issues global tender to pre-qualify for chartering ship - 2012-05-21

Looking to charter a liquefied natural gas (LNG) ship on a long-term basis? Book it four years ahead of time. That's what Petronet LNG Ltd is doing. According to the plan, the company is to commence LNG transportation from Kochi Regasification Terminal between January and June 2016. However, to achieve that, it has issued a global notification to pre-qualify ship owners and operators to provide an LNG ship.

The owners and operators will be responsible for shipping-related activities — right from loading and unloading. Mr C.S. Mani, Director (Technical), said that while the plant is ready for commissioning, the full-fledged movement of LNG would commence in 2016 only. “We need to order now to make sure we have the ship ready by then. It takes such a long time,” he said.

Petronet LNG is a joint venture company promoted by Oil and Natural Gas Corporation, Indian Oil Corporation and Bharat Petroleum Corporation. It is setting up a greenfield LNG Regasification Terminal at Kochi in Kerala with an annual capacity of five million tonne. It has signed a long-term LNG sale and purchase agreement for supply of 1.44 mtpa of LNG from Gorgon, Australia, to Kochi on free-on-board basis for a period of 20 years. According to Mr Hemant Bhattbhatt, Senior Director, Deloitte in India, typically LNG ships are custom-built and designed for the user's specific requirements if they are to be given on long-term charter. As such the chartered ships must be getting built and will require time for construction. Hence, the tie-up four years in advance, he said. By 2017 it is expected that 175 new ships will need to be added to the current global fleet of 365 to address the demand for LNG transportation.

Currently, only 70 are on order and given the generally depressed shipping market conditions and a degree of scepticism around the ‘bubble-like growth' in demand for LNG carriers, further orders for about 100 more ships are difficult to materialise. Hence a supply shortage is anticipated and this could well be influencing the decision to tie-up the ships four years ahead.

Source : Hindu Business Line